Testimony by Dr. Brian E. Donnelly

Executive Director, University Park, Southern Illinois University Edwardsville,

Before the Field Hearing of the U.S. Senate Subcommittee on Research, Nutrition, and

General Legislation of the Committee on Agriculture, Nutrition, and Forestry

Tuesday, April 18, 2000

Good morning, I am Dr. Brian Donnelly, Executive Director of University Park, Southern Illinois University Edwardsville. I am here in my role as the representative of the site that has been chosen for the National Ethanol Research Pilot Plant.

I would like to begin this morning by complimenting Senator Fitzgerald and the Senate Committee on Agriculture for holding this hearing and for the commitment to the development of a safe, dependable, cost-efficient fuel to meet the clean air needs of our nation.

Particularly, I would like to compliment the Committee and the entire Senate for passage of S. 935 to "promote the conversion of biomass into biobased industrial products." This legislation, thanks to an amendment offered by Senator Fitzgerald, includes a federal authorization for the construction of the National Ethanol Research Pilot Plant at SIUE. As my statement will explain, the NERPP holds the potential to provide a bright future for ethanol and the environmental and energy security that it provides. Senator Fitzgerald has been a leader in getting the U.S. Senate to recognize the benefits of ethanol and the NERPP. It is an honor, Senator, to appear before you today.

University Park is a 330-acre research and technology park located on the 2,660-acre campus of Southern Illinois University Edwardsville (SIUE). The State of Illinois has invested $3.1 million in University Park, building concrete roads and installing utilities capable of supporting more than 1,000,000 square feet of building space. Approximately 155 acres are fully improved, with street lighting, entry signage, landscaping and buried utilities. The site includes massive telecommunications infrastructure.

University Park exists to foster regional, state, and national economic development by leasing, or otherwise making available, tracts of land to corporations, non-profit organizations, and government agencies that could benefit from University Park's strategic location. This site is at mid-continent, next to a comprehensive University, in the Illinois suburbs of St. Louis and just thirty minutes away from Lambert-St. Louis International Airport. University Park already includes six privately owned buildings that house eight companies, four non-profit organizations, and specialized facilities operated by two public universities.

The very laudable efforts of Senator Fitzgerald and other leaders to replace MTBE as an oxygenate will be complemented by the construction of the ethanol pilot plant, a facility that will enhance the cost effectiveness of ethanol - a renewable fuel. University Park and SIUE have been working since 1995 to help create the National Ethanol Research Pilot Plant because we believe that increasing the use of ethanol as a motor fuel is an important local, state and federal priority. I will not recite all of ethanol's well-known environmental, economic, and national security benefits, but allow me to provide the following overview.

The National Ethanol Research Pilot Plant is designed to improve the efficiency of ethanol production. Increased operational efficiency will help in two ways. First, it will increase market penetration by this efficient and environmentally friendly fuel. Second, it will reduce the role of government incentives.

There are scores of researchers, throughout the United States and in several other nations, actively engaged in research designed to improve the efficiencies of ethanol production. Their approaches vary widely. Some are examining processes for grinding corn, hydrolyzing starch, fermenting glucose, distilling and dehydrating alcohol, or converting corn fiber to ethanol. Others are interested in engineering the corn kernel, altering enzymes, breeding or genetically engineering new strains of bacteria, yeast and fungi, or in producing or recovering valuable co-products of the ethanol production process.

Many of these research efforts are very promising. However, they share a common problem. Encouraging results, obtained at the laboratory level, have not been tested on a commercial scale because of the prohibitive costs and risks of injecting an exploratory technology into an existing facility. These costs and risks have, in effect, created a logjam of research projects waiting to go forward to commercialization. For this reason, a 1994 USDA report indicated that a pilot scale ethanol production facility that would evaluate ethanol process research "could be a major factor in the future utilization of corn."

In 1995, SIUE received a $500,000 grant from the United States Department of Agriculture to study the feasibility of constructing a pilot ethanol plant in Illinois. The study looked at several things. First, it examined what would be needed in a designated site to accommodate the pilot plant. Second, it reviewed whether it was possible to build a pilot plant that would emulate a full-scale wet and dry facility. Third, it tried to understand the economic implications of commercializing some of the ethanol production techniques currently being developed by laboratory researchers.

Engineers from the Fluor Daniel Company succeeded in producing a preliminary design for a pilot ethanol plant that would emulate full scale corn wet mill and corn dry mill production facilities and be a very flexible platform for the testing of many different types of technology.

In addition, the benefits of such a facility were clearly demonstrated. Representatives of the fuel ethanol industry, as well as related engineering firms, were asked to select several research projects from a list of 102 that hold the greatest potential for reducing the cost of manufacturing ethanol from corn. Ten projects were selected. Stanley Consultants, Inc. conducted an economic analysis of these ten projects and reached a dramatic conclusion. If just five of these technologies are sped to commercialization through the ethanol pilot plant, the cost of converting corn to ethanol could be reduced by approximately 10 cents a gallon. In 1999,

1.56 billion gallons of ethanol were produced in the United States, which would have resulted in production cost reductions of $156 million per year.

Late in 1996, Congress appropriated $1.5 million for final design of the pilot plant. Using these funds, Raytheon Engineers and Constructors were employed to finish designing the plant and produce bid packages. These bid packages are prepared and ready to mail. If construction funds for this project were appropriated today, construction of the facility would begin within a few months. The State of Illinois believes so strongly in this $20 million project that it has already appropriated $6 million. If the additional $14 million federal share becomes available, within a year or so, this major national asset will be on line, with all of the positive ramifications for the environment, the economy, national security and ethanol subsidy reduction.

In closing, I would like to thank Senator Fitzgerald for the opportunity to appear today and would be pleased to answer any questions that you may have.